Gold surged Mon as USD eased on a rally in risk assets amid signs of COVID-19 tapering on both sides of Atlantic and Fed's latest monetization stimulus of SME bailout loans

Dow jumped on signs of COVID-19 parabolic curve flattening and hopes of another corona stimulus of $1.5T by May

Gold is now also acting as a risk-asset rather than risk-aversion safe haven as cash (USD) is king amid COVID-19 pandemic (doomsday)

Gold (XAU/USD-spot) closed around 1656.55 in the U.S. session Monday, surged almost +2.36% as USD eased on a rally in risk assets amid signs of COVID-19 tapering on both sides of Atlantic and Fed’s latest monetization stimulus of SME bailout loans. On Monday, the U.S. reported total new COVID-19 cases at 19741 vs 25316 a day before, while new deaths at 874 vs 1165 prior day. What is more ‘encouraging’ NY, the present epicenter of COVID-19 in the U.S. also tapered to 7671 vs 8243 (new cases), while new deaths at 599 vs 594 prior a day. Although it’s just one day of tapering after several days od surge, the market is quite optimistic that the COVID-19 pandemic in the U.S. maybe now peaking and we may see soon a clear flattening of the parabolic corona curve.

Practically, no viral pandemic lasts forever; it’s not possible. The history of the last hundreds of years shows that usually after 60-70% of community infection levels and 70-90 days, the community should naturally develop herd immunity (natural production of antibodies in the blood against such virus, pathogens).

This theory of natural herd immunity in the affected community also holds true for the COVID-19. And that’s why China’s Wuhan, the epicenter of the COVID-19 recovered like ‘magic’ late Feb (almost 90-days from reported COVID-19 epidemic). China followed very hard (draconian) lockdown approach in Wuhan city after the known outbreak of COVID-19 epidemic to contain it largely within the city of 11M people and moreover they tried to contain it within the area of that controversial animal meat wet market (near Wuhan Virus CDC and Level-2 Army Bio-lab), the so-called ground-zero of the COVID-19.

In any way, there were also positive reports for Italy late Friday:Almost 70% of blood donors in Lombardy (Castiglione d'Adda, the epicenter of the outbreak), tested positive (they had the antibodies) and none had developed any corona symptoms before! Lombardy is probably approaching herd immunity.

This is great news for Italy’s Lombardy County, the ground zero of COVID-19 in that nation. As per reports, there were some suspected cases of COVID-19 patients (with mild symptoms) back in Oct-Nov’19, almost in the same period in China’s Wuhan city. In Italy, the COVID-19 outbreak occurred from 1st week of March; it reported 1701 COVID-19 cases on 1st Mar and 5883 on 7th March. And now it’s almost 120000 now on 3rd Apr.

So, as per natural herd immunity theory, COVID-19 should also taper in Italy from the 1st week of May, if not earlier and we could see flattening of the parabolic COVID-19 curve by then (projected 100K total cases-maximum). The same is almost true for Spain, Germany, France and U.K. with a 2-weeks backlog; i.e. between Apr-June end, we could see a clear flattening trend in the parabolic COVID-19 chart as it’s now fast approaching herd immunity resistance levels (in the language of Technical analysis!!). In the case of U.S./NY, it’s also almost the same; i.e. from April end/May 2nd week to June end, we should see a clear trend of COVID-19 tapering in Europe as-well-as U.S., other North American countries (like Canada), and Asia-Pacific (outside China).

As per the current run rate, total corona cases in the U.S. should peak around 500K and 1M in a worst-case scenario, while cumulative deaths should be around 15K and 100K in a worst-case scenario. But even if COVID-19 fades from April-June onwards outside China, the corona scar will remain at least another one year, till an effective Vaccine does not evolve to prevent not only COVID-19 but also all such probable virus cases in the future.

Talking about the COVID-19 vaccine, as per the WHO, it’s still at least 12-18 months away (Jan-June’21) and various RNA vaccines are now in the animal or even limited human trial stage. Basically, the world is now scrambling for the vaccine and we are hearing some extremely positive results on animal testing. And Trump is also ‘urging’ for rapid development of COVID-19 vaccine, promising ‘deregulation’ to a great extent.

On 2nd Apr, the U.S. based University of Pittsburgh tweeted:

ICYMI: Scientists from Pitt Dept of Med announced a highly scalable potential vaccine for the new coronavirus behind the COVID19 pandemic.

Also, there was another report that said Researchers in Australia found Ivermectin, an FDA-approved anti-parasite drug commonly used to treat an infection like Dengue fever, nay be effective in treating COVID-19 within 48-hrs.

The research article by the concerned team of doctors said:

Ivermectin is an inhibitor of the COVID-19 causative virus (SARS-CoV-2) in vitro. A single treatment is able to effect ∼a 5000-fold reduction in virus at 48h in cell culture. Ivermectin is FDA-approved for parasitic infections and therefore has a potential for repurposing. Ivermectin is widely available, due to its inclusion on the WHO model list of essential medicines. We report here that Ivermectin, an FDA-approved anti-parasitic previously shown to have broad-spectrum antiviral activity in vitro, is an inhibitor of the causative virus (SARS-CoV-2). Ivermectin, therefore, warrants further investigation for possible benefits in humans.

Ivermectin is very widely used and seen as a safe drug. We need to figure out now whether the dosage you can use it in humans will be effective—that’s the next step. We found that even a single dose could essentially remove all viral RNA by 48 hours and that even at 24 hours there was a really significant reduction in it. Ivermectin’s status as a drug that has already been studied and approved to treat other conditions offers a decided advantage over the development of new drugs, a long process that typically involves many years of studying safety and efficacy before being able to reach human patients.

As the virologist who was part of the team who were first to isolate and share SARS-CoV-2 outside of China in January 2020, I am excited about the prospect of Ivermectin being used as a potential drug against COVID-19. The WHO approved the use of Ivermectin in humans to treat onchocerciasis in 1987. Ivermectin is safe and can be used on a wide scale. It is also a very effective treatment and has single-handedly transformed the lives of millions of people suffering from onchocerciasis.

On Monday, there was also another report of COVID-19 potential vaccine: Russia has developed a treatment regimen for severe coronavirus pneumonia based on the Dalargin drug, the Federal medical and biological agency reported; clinical trials are starting, the department added.

On Friday, another report suggests that German Biotech groups developing mRNA based COVID-19 vaccine have called for governments to ease clinical trial regulations for hundreds of millions of doses to be available by the end of the year.

On Friday, Japan’s FM Suga also assured that Japan will provide its version of COVID-19 medicine Avigan (Flavipiravir; a known anti-flu drug) to 30 countries free of cost, which have requested for the drug.

On Saturday, in his remarks on COVID-19 daily media briefing, Trump said:

Okay, thank you very much, everybody. All these people have been working very, very hard today, I’ll tell you. For a long time, they’ve been working.

But before I begin, I want to express our nation’s well wishes to Prime Minister Boris Johnson as he wages his own personal fight with the virus. All Americans are praying for him. He’s a friend of mine. He’s a great gentleman and a great leader. And he’s — as you know, he was brought to the hospital today, but I’m hopeful and sure that he’s going to be fine. He’s a strong man, a strong person.

Today, every patriotic American heartbeat in solidarity with the incredible people of New York and New Jersey. They’ve really become a very hot zone, but some very good things are happening. In New York, the first time where the deaths were less from the previous day. That’s the first drop so far. So maybe that’s a good sign; it could be. And the hospital levels are starting to perhaps decrease. It’s been very short but perhaps decrease---So we wish Governor Cuomo and all of the people in New York great. And, New Jersey, your governor is doing a great job. He’s doing a great job in New Jersey. They got hit very hard-----In the days ahead, America will endure the peak of this terrible pandemic.

-----I can report today that the United States has now tested and given results — gotten results of 1.67 million people. That’s far more than any other country has been able to do. And you remember, we inherited a broken system. So a lot of this has been developed.

And the other thing that we bought a tremendous amount of is the hydroxychloroquine — hydroxychloroquine — which I think — as you know, it’s a great malaria drug. It’s worked unbelievably. It’s this powerful drug on malaria. And there are signs that it works on this---Some very strong signs. And, in the meantime, it’s been around a long time. It also works very powerfully on lupus----Lupus---So there are some very strong, powerful signs, and we’ll have to see---Because again, it’s being tested now. This is a new thing that just happened to us — the “invisible enemy,” we call it.

And, if you can, if you have a — no signs of heart problems, the azithromycin [sic] — azithromycin — which will kill certain things that you don’t want living within your body — it’s a powerful drug — if you don’t have a problem, a heart problem, we would say: Let your doctor think about it. But as a combination, I think they’re going to be — I think they’re two things that should be looked at very strongly.

Now, we have purchased and we have stockpiled 29 million pills of the hydroxychloroquine — 29 million.A lot of drugstores have them by prescription, and also — and they’re not expensive. Also, we’re sending them to various labs, our military. We’re sending them to the hospitals. We’re sending them all over.

I just think it’s something — you know the expression, I’ve used it for certain reasons: “What do you have to lose?” What do you have to lose? And a lot of people are saying that when — and are taking it — if you’re a doctor, a nurse, a first responder, a medical person going into hospitals, they say taking it before the fact is good. But what do you have to lose? They say, “Take it.” I’m not looking at it one way or the other, but we want to get out of this. If it does work, it would be a shame if we didn’t do it early. But we have some very good signs. So that’s hydroxychloroquine and azithromycin.

And, again, you have to go through your medical people, get the approval. But I’ve seen things that I sort of like. So what do I know? I’m not a doctor. I’m not a doctor. But I have common sense. The FDA feels good about it. They’ve — as you know, they’ve approved it. They gave it a rapid approval. And the reason: because it’s been out there for a long time and they know the side effects and they also know the potential. So, based on that, we have sent it throughout the country and we have it stockpiled — about 29 million doses. Twenty-nine million doses. We have a lot of it. We hope it works.

----This morning — I was talking 151. For four days, I said 151. A hundred and fifty-one countries. This morning, it’s 182 countries. It jumped up a lot. So, as of this morning, it’s 182 countries that are under attack from this monster.

And I just want to thank everybody. I want to thank the incredible professionals on the task force also. We had a big meeting today. We — were calls all day long to so many different people. And I think our package to get everyone working when we’re ready is really turning out to be successful. We may have to make it larger because it’s been really successful. But all of that comes back to this country. We want to get them back. We want to get our people back to work. Everybody wants to be back. We want to open up our country as soon as possible.

Driven by the goal of the brightest minds in science — we have the brightest minds in science, but we’re driven by the goal of getting rid of this plague, getting rid of this scourge, getting rid of this virus. These brilliant minds are working on the most effective antiviral therapies and vaccines. We are working very, very hard. I have met many of the doctors that are doing it. These are doctors that are working so hard on vanquishing the virus.---They’re staying — we strongly recommend staying at home, practicing vigorous hygiene, and maintaining social distance, so you’re — you’re just not going to catch it. It’s the most effective weapon in this war.

And tremendous strides have been made. I think the vaccines — we’ll have a report on that. But the vaccines — we’re working together with other countries. We’re also working with other countries — many other countries. And we all want everyone else to be first. We’re very happy. But we are very far down the line on vaccines. We’ll see how that all works. Johnson & Johnson is doing a great job, working very hard. A vaccine would be great. Therapy —therapy and therapeutics would be great. We’ll see what happens. In the meantime, you may listen to what I said about the two drugs mentioned.

My administration is rapidly implementing the largest emergency economic relief package in American history. You’ve seen what’s been happening. Billions of dollars in small- business loans have already been processed through Paycheck Protection Programs.

So we went out on Friday and, literally, it’s become so popular. It’s been worked with the banks. They get it to the small business. It’s all about employment. It’s all about jobs. We want you to keep your jobs. It gives small business funding to keep the workers on the payroll. And we’re sending direct cash payments to millions of Americans and rushing aid to the hardest-hit industries. We’re saving industries. We will be — you’ll be seeing it. And if we do more, we’re going to do more, and we’re going to try and get directly to people that are hit so hard.

But we’re going to take care of our workers. We’re going to take care of our citizens. We’re going to take care of our small businesses. We’re going to take care of our large businesses: the airplane industry, — the airline industry. A lot of great industries that we have that are in trouble because of what took place over the last short period of time.

These are industries that were doing better — for the most part, doing better than ever. The airlines were doing great. Oil was doing great — oil and gas. And the energy industry was doing phenomenally well, and it got hit as nobody has ever been hit before. Just about like no industry has ever been hit before. There’s never been anything like this.

But we see light at the end of the tunnel. Things are happening. Things are happening. We’re starting to see light at the end of the tunnel. And hopefully, in the not-too-distant future, we’ll be very proud of the job we all did. We can never be happy when so many people are dying, but we’re going to be very proud of the job we did to keep the death down to an absolute minimum — the least it could have happened with this terrible, terrible virus.

About the possible horrific, hardest and saddest weeks in terms of COVID-19 casualties (equivalent to Pearl Harbor or 9/11 moment), Trump agreed but also pointed out it may be the peak:

I don’t think they’re so different. I think we all know that we have to reach a certain point, and that point is going to be a horrific point in terms of death. But it’s also a point at which things are going to start changing. We’re getting very close to that level right now. And the next week and a half, two weeks are going to be — I think they’re going to be very difficult.

At the same time, we understand what they represent and what that time represents, and hopefully, we can get this over with because this is a very horrible thing for the world. Hey, look, we’re one country out of 182 now that have — 182 countries. I have a friend of mine — said he didn’t know we had so many countries in the world. A hundred and eighty-two countries are now affected by this. So we want to get it over with. Okay?

On his (White House) earlier horrific projections about U.S. corona death 100K-240K, Trump clarified it was the possible min-max range if the U.S. is not actively managing the corona situation (like maintaining strict lockdown rules):

Well, we hope we can stay under those numbers. Those are numbers of death. And we hope we can stay under those numbers. That would be terrific. And as far as those numbers as possible. Now, if we did nothing, you know that number too. But the American people really stepped up; so did the professionals. They just really stepped up. So we’re hoping to stay under those numbers. And that means the minimum and the maximum, but we’re hoping to stay under the minimum number. You know what that number was.

Trump was again asked whether he would change his previous projections of 100-240K corona deaths-Trump clarified he is now expecting to flatten of the parabolic corona curve:

I would say the answer is “yes,” but I would also say that we’re not going to know really in terms of a final toll until we get out to the end. And we’re probably, possibly, not so far away. We’re getting closer.But it’s our goal to stay as far under that minimum number — the minimum number as possible. Okay? That’s what we want to do.

There is a raging controversy over Dr. Trump’s active persuasion for the public to take Chloroquine as a precaution even without corona symptoms. Trump explained he is asking for Chloroquine as a last resort for a COVID-19 (before dying):

Because I want people to live and I’m seeing people dying. And I see people that are going to die without it. And you know the expression. When that’s happening, they should do it. What really do we have to lose? We also have — this medicine has been tested for many years for malaria and for lupus, so it’s been out there. So it’s very strong, powerful medicine, but it doesn’t kill people. We have some very good results and some very good tests. You’ve seen the same test that I have.

In France, they had a very good test; they’re continuing. But we don’t have time to go and say, “Gee, let’s take a couple of years and test it out. And let’s go and test with the test tubes and the laboratories.” We don’t have time. I’d love to do that. But we have people dying today. As we speak, there are people dying. If it works, that would be great. If it doesn’t work — we know, for many years, malaria, — it’s incredible what it’s done for malaria; it’s incredible what it’s done for lupus. But it doesn’t kill people.

That’s one of the things with a vaccine. When we have a vaccine, we have to do tests because when you inject that vaccine, when they take whatever ever it is they have to take, we have to make sure it doesn’t have a horrible impact, destroy somebody. Good? So we have to test it for a long period of time. This one, not so much because it’s been out there.

Now, I’m not acting as a doctor. I’m saying, “Do what you want, but there are some good signs.” You’ve read the signs, I’ve read the signs. With the other one, there are some very good signs also. Different — going together works very well. But there may be an indication that if you have a problem with your heart, you shouldn’t take what we call the Z-Pak. You shouldn’t take it, and that’s okay.

But I would love to go to a laboratory and spend a couple of years testing something. We don’t have time. We don’t have two hours, because there are people dying right now. If it does help, great. If it doesn’t help, we gave it a shot. We gave it a shot. That’s the way I feel.

You know, we passed something — yeah, I would — I would be very serious about taking it. We passed something that I’m very proud of. It’s called the Right to Try. For 45, 50 years, they’ve been trying. It makes so much sense. We have the greatest doctors and labs and lab technicians, the greatest medicines, the greatest minds in the world. Everybody admits it. And when we’re close to having something, or when we have something that tests incredibly well, you couldn’t use it for years because they would take years and years to test.

So with the help of also Democrats — I got it bipartisan, but they’ve been trying to get this passed for — for decades. You know that. It’s called the Right to Try. So a person would be diagnosed terminally ill from something. And in the old days, meaning before a year ago, they would say, “Do you think I could try this — this pill, this whatever, this medicine that’s testing so well?” “No, you can’t do that. You can’t do that under no circumstances.” They’d leave for Asia, they’d leave for Europe, they’d leave for — if they had money. If they had no money, they’d go home and die with no hope.

We got a thing called the Right to Try. If somebody is very ill, terminally ill, they’re going to die. They — and it was very complex. It wasn’t as easy as it sounds because there were huge liability problems. The drug companies didn’t want to do it because they didn’t want it on test results — because these are very sick people, so they didn’t want to bring down their test results. The insurance companies had tremendous problems.

I got everybody in the room, I said, “Look, we’ll sign a waiver.” The person taking it will say, “We’re not going to sue.” The family is not going to sue the drug company, not going to sue the insurance company, not going to sue the state, the city, or the federal government. Okay? It’s called “exculpation.” And we got it done. It’s a very simple agreement. I don’t know why nobody ever thought of it, but they never thought of it. I did. And we got it done.

Now we have the Right to Try, which is actually, in my opinion, much more difficult than what we’re talking about here. But if there’s a medicine or something, a possible cure, or something that’s looking good and somebody has something that’s going — they’re going to die or they’re very sick, they take it. And, you know, we’ve had some unbelievable results----Unbelievable results. And it also gives people hope.

Trump was asked recommendation for Chloroquine is the job of the concerned doctor and not his; Trump explained he is not a doctor but trying to save human lives from deadly COVID-19 and he has no luxury of time:

I’m not. I’m not (a doctor)---I’m just saying —very simply. I’m not at all. I’m not---Look, you know what I’m trying to do? I’m trying to save lives----I want them to try it. And it may work, and it may not work. But if it doesn’t work, it’s nothing lost by doing it. Nothing--- Because we know — long term, what I want, I want to save lives. And I don’t want it to be in a lab for the next year and a half as people are dying all over the place.

All I’m doing is saying — well, I’ll tell you what I accomplish. We bought massive amounts of it — 29 million doses of it. We have it coming from all of the labs. We’re actually now doing it here because in case it does work, we want to have it. And we’ve given it to drugstores, we’re — we’re sending it all over. FEMA is doing it. FEMA is doing it. We’re doing it through different channels, many different channels, including the companies that make it.

It’s a very special thing. Now, it may not work, in which case, hey, it didn’t work. And it may work, in which case, it’s going to save a lot of lives. Now, a lot of people say, if the people walking in prior to getting it, if they take it, it has a profound effect. Well, maybe it does and maybe it doesn’t. I don’t want to wait a year and a half to find out.

On projection about corona death tolls of 100-240K and continuing social distance (lockdown), Dr. Brix, one of a key member of the COVID-19 task force, said although the minimum number of deaths of 100K maybe still possible, it’s certainty avoidable if the Americans maintain strict social distance protocols:

I think the most important thing right now is when we were talking about why we are hopeful. We’re hopeful because last time I was here, I wasn’t able to really tell you that Italy and Spain were coming across their apex and coming down the other side. And I think, to me, that’s extraordinarily hopeful. They just completed four weeks of really strong mitigation. And I think that’s our word to the American people, is we can look like that. Two other countries look like that now — two other countries with a very similar experience to our experience, with higher case numbers and higher mortality.

So that’s what the promise is. The promise is: If we do this, we could potentially be better. Now, Dr. Fauci and I today got another update from another independent modeler, and the numbers came in close to that hundred thousand number----Again, but we believe — Dr. Fauci and I — that if every American follows the guidelines — six feet, washing hands, not social gathering — that will have an even greater impact. And the other side of the equation certainly is our remarkable healthcare providers, our respiratory therapists, our laboratory technicians, our nurses, and doctors. They’re saving lives every day. And so that changes the number too.

Trump added Americans have to maintain the ‘painful’ social distancing guidelines; otherwise, COVID-19 deaths may be much more than the maximum projection levels of 240K:

I also think that Dr. Fauci and Dr. Birx are very impressed with the American people. And I’m not going to put words in anybody’s mouth — I would never do that — but I am, and I will say that they are doing may be a better job than we all thought even possible.

When you look at streets in New York where there’s nobody in the street, no cars, no nothing — I see it. You know, I’ve seen those streets for a long time and they’re packed all the time. And now you see there’s nobody. You look at other places; you look at what’s going on in California where they’re doing a fantastic job. They really are. The governor is doing great. I’m proud of them. I’m proud of a lot of people — proud of a lot of people on the other side. You know, of a lot of people.

Really — I’m really delighted to work with people that, frankly, on other issues, I didn’t get along so well with. We disagree on this or that; we don’t have to go into that now. But we’re getting along with a lot of people. And they’re happy with us. We’re happy with them.

But I really believe that the American people are doing a better job than anybody would have thought even possible, and that’s one of the reasons we can even be talking about the kind of number that we hope will be talking about, which is at the minimum level instead of the maximum or beyond. It’s not even the maximum — it’s much beyond a maximum level, which would be horrific.

On any plan to impose tariffs on imported oil, Trump clarified he is open to the idea to save the job producing U.S. shale oil industry:

Well, if the oil price stays the way it is because of people that really want to see it go up — when I say get — we want to save a great industry. We built a great industry in this country. If they don’t get along, I would do that. Yeah, I would do tariffs, very substantial tariffs. Because we’re independent now; we have our own oil.

And if I did the tariffs, we essentially would be saying, “We don’t want foreign oil. We don’t want any foreign oil. We’re just going to use our oil.” And that would help to save an industry. And, you know, it’s become a tremendous job producer. And it’s great to be independent. We’re independent. Our energy is now independent. We produce more oil than — oil and gas than anybody else, than any other country. And that all took place over the very recent time---

Now, in the meantime, I’m seeing 91 dollars — 91 cents a gallon out on the road. Okay? A lot of people are happy. I see very inexpensive jet fuel. We’re trying to save the airline industry. But I want to save our great energy industry and that’s what we’re doing. Yeah. So I would — I would absolutely do that. And what we’ll do — the price will still be very low — but what we’ll do is we’ll save — and, very importantly, we’ll save tens of thousands of jobs.

One of the other things we’re doing is having oil shipped to our strategic oil reserves. Okay? And, you know, we’re buying it for the right price and we’re shipping it. In some cases, we’re storing it for nothing. They’re there. We’re filling up our reserves with this very inexpensive oil. Nobody thought they’d ever see a price — this is like from the 1950s, where they had big dollars, okay?

So, no, I would use tariffs if I had to. I don’t think I’m going to have to because Russia doesn’t benefit by having this and Saudi Arabia doesn’t benefit by having it. They — you know, oil and gas are their major sources of income. So it’s obviously very bad for them. But we have to — we have an industry that’s a very important industry and it’s really formed beautifully. It was the virus that killed it because what happened is it’s down 40 percent from the day this happened — 40 percent. Otherwise, it would be doing phenomenally well. So that’s it.

On Pelosi’s plan for another corona stimulus/welfare package of additional checks for the U.S. household, Trump said although he appreciates the idea, he is keeping for a bipartisan infra stimulus (projects) of $2T to rebuild America:

No, but I like the concept of it. I think it’s good. We’re talking about a different way of doing it, but I like the concept. I like the concept of infrastructure. Our country has to be rebuilt. They spent all this money in the Middle East — $8 trillion. We’re up to now $8 trillion in the Middle East. We got to rebuild our country. Okay? We have to rebuild our roads, and our schools, our bridges. We have to rebuild our country. So, I like an infrastructure bill. I also like money going directly to people. It’s not their fault that this happened.

And I do think this — especially the faster we can get it open, our country — can you believe we’re talking about our country, getting our country open? The faster we get it open, the bigger the boom, the bigger the rocket ship going up. I think it has a chance to go really quickly, relatively quickly. I’d like to see very quickly, but we’ll see. But part of the stimulus and part of what we’re doing, that will help it. And the nice part is we’re paying practically zero interest rates. You know we’re paying very little. It’s one of the reasons I like the infrastructure bill because we’re borrowing — we have a strong dollar. And the advantage to a strong dollar is everybody wants to invest in this country. They all want to buy our dollar.

On Monday, USD was also undercut by the Fed’s latest monetary stimulus as Fed will eventually buy COVID-19 payroll loans issued by banks. As a pointer, as part of the SBA and U.S. Treasury's Payroll Protection Program (PPP) to bail out struggling SMEs, it provides America's banks and credit unions some $350BN in guaranteed cash to use to make loans to the sector. The proceeds would be used to fund payroll. However, the banks were reluctant to pass through the money to America's SMEs, ostensibly due to concerns about the low rate on the loans at 0.5% and future NPL/NPA. Subsequently, Mnuchin hiked the applicable interest to +1.00%.

The Fed issued a statement:

Federal Reserve will establish a facility to facilitate lending to small businesses via the Small Business Administration's Paycheck Protection Program (PPP) by providing term financing backed by PPP loans:

To facilitate lending to small businesses via the Small Business Administration's Paycheck Protection Program (PPP), the Federal Reserve will establish a facility to provide term financing backed by PPP loans. Additional details will be announced this week.

As per reports, the former White House trade advisor Navarroclearly warned Trump in late Jan for a possible pandemic in the U.S. due to severe lack of preparations or ammunition to defense the COVID-19, costing hundreds of thousands of American lives and trillions of dollars in economic losses.

In an official White House memo, titled ‘Impose Travel Ban on China?’;Navarro, a known China hawk said:

If the probability of a pandemic is greater than roughly 1%, a game-theoretic analysis of the coronavirus indicates the clear dominant strategy is an immediate travel ban on China. The lack of immune protection or an existing cure or vaccine would leave Americans defenseless in the case of a full-blown coronavirus outbreak on U.S. soil. This lack of protection elevates the risk of the coronavirus evolving into a full-blown pandemic, imperiling the lives of millions of Americans.

Regardless of whether the coronavirus proves to be a pandemic-level outbreak, there are certain costs associated with engaging in policies to contain and mitigate the spread of the disease. The most readily available option to contain the spread of the outbreak is to issue a travel ban to and from the source of the outbreak, namely, mainland China---under an aggressive containment scenario, a travel ban may need to last as long as 12 months for proper containment.

It’s unlikely the introduction of the coronavirus into the U.S. population in significant numbers will mimic a ‘seasonal flu’ event with relatively low contagion and mortality rates. This historical precedent alone should be sufficient to prove the need to take aggressive action to contain the outbreak. The early estimates of how easily the virus was spreading supported the possibility that the risks were even greater than the history of flu pandemics suggested.

Further, in late Feb, Navarro again warned:

There is an increasing probability of a full-blown COVID-19 pandemic that could infect as many as 100 million Americans, with a loss of life of as many as 1.2 million souls---This is NOT a time for penny-pinching or horse-trading on the Hill.Any member of the Task Force who wants to be cautious about appropriating funds for a crisis that could inflict trillions of dollars in economic damage and take millions of lives has come to the wrong administration. There is a need to increase funding for the government to purchase personal protective equipment for health care workers, estimating they would need at least a billion face masks over a four-to-six-month period.

As a pointer, from the very beginning of this COVID-19 crisis, Trump was trying to downplay it as ‘ordinary Flu. Trump suggested it was being used by Democrats to undercut his re-election prospects, are likely to define his presidency; i.e. Trump was busy in politics and his personal ratings ahead of Nov election. And Trump didn’t take his executive power till now to enforce total lockdown (except essential products and services) across the U.S. to prevent another NY in other states.

As per reports, Navarro has a significant objection to the Trump admin’s apparent strategy of allowing COVID-19 spread into the community to some extent for the development of natural herd immunity. Navarro was also at odd with Dr. Fauci regarding the use of Chloroquine.

Conclusions:

Trump is wrong that the U.S./global economy will bounce back after containment of COVID-19 like ‘V’ shaped sharp recovery; it will be rather ‘U’ shaped gradual recovery. Even if COVID-19 fades from April-June onwards outside China due to the development of natural herd immunity, the corona scar will remain at least another one year, till an effective Vaccine does not evolve to prevent not only COVID-19 but also all such probable virus cases in the future. The world may not be the same at least until the development of an effective corona vaccine, which is still 12-18 months away despite significant progress.

Thus, although the corona lockdown may be gradually withdrawn between April-June in different parts of the world as per their respective COVID-19 trajectory, the economy will take time to stabilize of its own feet till at least H1-2021 or earlier until general public (consumers) are vaccinated by the COVID-19 mRNA vaccine.

Till then consumers will be not confident for the fear of another similar pandemic, economic uncertainty and thus limit their discretionary spending to a great extent amid COVID-19 and economic uncertainty, even the economy is flushed with unlimited monetary and fiscal stimulus. The world will be never before as it was (pre-COVID-19) because of widespread social and economic impact along with a general stigma against China (‘Wuhan Virus’).

Bottom line:

But as the world can’t wait for another 12-18 months to vaccinate against COVID-19 and fully restarts the economy, Trump and other policy actors may consider using present or some modified form of BCG vaccine (like Chloroquine) as an ad-hoc measure to immunize against the coronavirus until the actual vaccine and therapies evolve. Various studies show that COVID-19 mortality rate is very low in China, India, Pakistan, Sri-Lanka and those countries, having universal BCG vaccination policies from the last few decades than those which have no such policy (U.S., Italy) at all or having a partial policy (not universal-like France, the U.K., and Spain).

Trump, on his part, was busy with his COVID-19 PR campaign and tried to macro-manage (like in his real estate business) everything from Masks, Testing Kits and Ventilators, resulting in a huge cost for the U.S. economy and social stability. Trump should declare a total lockdown in the U.S. through his executive power in the early days rather than waiting for Months.

On early Tue, Gold edged down as USD inched up on talks of another corona stimulus package by the Capitol Hill for $1.5T by May. In any way, Gold is now also acting a risk asset amid COVID-19 pandemic as cash (USD) is king now.

Technical Outlook: Gold Spot (XAU/USD):

Technically, whatever may be the narrative, Gold now has to sustain over 1580 for a further rally to 1595*/1610-1625/1650 and 1680*/1695-1705*/1720 in the near term (under bullish case scenario).

On the flip side, sustaining below 1575-1565, Gold may fall to 1545/1525-1500*/1470 and 1445*/1420-1400/1380 in the near term (under bear case scenario)

Gold now has to sustain above 1680 for a further rally to 1695/1705-1720; otherwise sustaining below 1675, Gold may fall to 1645/1620-1605/1590 and 1570* in the coming days.

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